Can Bouton’s unique vision drive SG forward?

Can Bouton’s unique vision drive SG forward?

Daniel Bouton, chairman of Société Générale, plays the game by his own rules. He doesn’t believe that to be a successful investment bank you have to be a global player with a franchise in almost every market. He won’t be rushed into acquisitions. And he thinks that French banks have an exciting story to tell. Having put potential high-growth markets such as equity derivatives and emerging Europe at the heart of his bank’s engine room, is he about to turn the accepted wisdoms on their head? Clive Horwood reports, with research by Lawrence White.

What lessons did Stan O’Neal learn from the restructuring of Merrill Lynch at the turn of the decade? What are Merrill’s plans in mortgages, private equity and asset management? And what continues to drive Merrill’s CEO forward? O’Neal reveals all to Clive Horwood in his first in-depth interview since becoming the firm’s chairman and CEO.

Daniel Bouton, chairman and CEO of Société Générale, discusses in detail his bank’s culture and strategy with Euromoney’s editor, Clive Horwood.

When Stan O’Neal took over as president and CEO of Merrill Lynch in 2001, the thundering herd of the 1990s was clapped out. O’Neal imposed a ruthless cost-cutting strategy that saved the firm’s independence. Now his rebuilding plans are starting to bear fruit. Can Merrill heed the lessons of the past, but at the same time make it back to the pinnacle of investment banking? Clive Horwood reports.

Stan O’Neal’s story is unique in investment banking. Born in Roanake, Alabama (because his home town’s hospital refused to serve African Americans), raised in Wedowee (population 750), he was educated in a schoolhouse built by his grandfather, who was born a slave. O’Neal’s father moved his family from the cotton fields to Atlanta, where he worked on a General Motors assembly line. Stan O’Neal worked there as a teenager but GM spotted his strong intellect and sent him on a scholarship to the GM Institute, where he gained a degree in industrial administration. He then took an MBA in finance at Harvard, graduating in 1978.

Banco Itaú expects regulatory approval next month for its planned takeover of Bank of America’s BankBoston, a subsidiary of the former FleetBoston. In return, Bank of America will take a 6% stake in Itaú, valued at $2.2 billion. The deal adds $9.7 billion in assets to Itaú’s balance sheet, making it the largest private lender in Brazil. Itaú will also gain BankBoston’s 66 branches and 200,000 clients. Meanwhile, Brazil’s equity markets have erased nearly six months of gains on fears that rising US interest rates will draw investment away from emerging markets.

The real test of Goldman Sachs’s new model will come in a prolonged downturn.

Ever since Kuwait amended its banking legislation in early 2004 to license foreign banks, outside players have continued to show confidence in a high-potential market.

Too few fund managers are paid to make asset allocation bets. That creates opportunities for those that do.

As stock exchange consolidation catches on around the world, it’s sobering to note the lessons of the Australian experience.

Bradford & Bingley’s treasurer, Peter Green, and head of capital markets and securitization, Mark Winter, want to regain ownership from investment banks of their institution’s dialogue with investors. They are following a simple strategy of diversifying the investor base. Allied to a remarkable level of transparency during the printing of new issues, this is already reaping its rewards. Alex Chambers reports.

Argentina’s central bank president reckons that it will take at least another two or three years before his country’s economic variables normalize. Martin Redrado says that although Argentina has made progress since the 2001/02 financial crisis, more patience is needed before it can achieve sustainable growth.

Investors might be keen to get out of Latin American assets right now, but that doesn’t mean they’ve fallen completely out of love with Brazilian debt. The Brazilian government tried to take advantage of the turbulent markets by announcing a $4 billion tender offer in June; the offer was a spectacular failure, attracting just $1.2 billion in bids.

Alan García’s victory over Ollanta Humala in Peru’s presidential elections left Venezuelan president Hugo Chávez seething. Peruvians rejected the populist Humala, who sought to distance himself from Chávez’s anti-American rhetoric despite having received the Venezuelan leader’s uninvited backing. Chávez threw insults at García, calling him “a thief, a demagogue, a liar”. García reiterated his support for democracy and free trade, shooting back a barb of his own: “The Chávez phenomenon is militarism with a lot of money.” It is a stunning metamorphosis for the former socialist president whose first term in the 1980s ended in hyperinflation and a terror campaign by Shining Path. Nevertheless, Lima’s financial community remains worried by García’s plans to renegotiate Peru’s free trade agreement with the US.

Foreign institutions considering an M&A foray into the financial services sector in Asia might want to pick up a copy of PricewaterhouseCoopers’ recent report on the matter before doing so.

New fund gives access to 1,353 listed companies on Shanghai and Shenzhen’s markets, compared with 118 H-share stocks and 88 red chips.

If you’re fed up with the poor performance of Asia’s equity markets recently, but still have a strong stomach for risk, consider Vietnam.

If Latin IPOs had a resurgence until a couple of months ago, so did structures that were either untried or hadn’t been used in years.

ScotiaBank, Canada’s third-largest bank, has announced its C$330 million takeover of Banco Interfin, the largest bank in Costa Rica. The two banks will merge through a public share offering, bringing ScotiaBank’s Costa Rican market share up to 13%.

Simplify, simplify, simplify. Thoreau’s mantra is good advice for rating agencies when it comes to allocating equity credit.

Equity-linked bankers are among the very few people who actually like to watch markets fall. This is because depressed equity prices and elevated volatility help to make convertible bonds a lot more attractive, especially given the rising interest rate environment.

The structured credit market has truly come of age. The correlation meltdown of 2005 spurred a new round of innovation, and shook out the weaker players. A new willingness on the part of investors to buy every part of the capital structure has encouraged the creation of a new suite of products, with more to come. However, with these new products come new risks. Now, more than ever, choosing the right manager is crucial.

A government committed to reforming Portugal’s public sector has also shown that it cares about capital markets. A recent 30-year bond issue signalled a new focus on developing the yield curve and a new covered bond law promises benefits for both issuers and investors.

When Euromoney's journalists were able to do a bit of work between World Cup matches in June, football was never far from our minds. And so it was, as we decided this year's winners of the awards for excellence, that we hit upon a related idea: if investment banks were countries in the World Cup, which would they be?

“Is that ABN Amro doing badly? I noticed they’re using a minicab firm. It’s always a sign that a bank’s in trouble when they use minicabs rather than licensed cabs”

Citigroup’s global head of fixed-income capital markets, Marwan Marshi, left the bank last month to pursue other interests. Marshi, who worked at Citigroup for 20 years, was previously co-head of credit markets alongside Chad Leat until last year when Leat was promoted and gained control of credit trading as well as credit origination and products. Citigroup is not appointing a replacement in Marshi’s role, which had become increasingly redundant. The regional heads of origination that reported to Marshi now simply report to Leat.

Efforts to launch a CMBS index in Europe have foundered, so the proponents of the product have now decided to abandon the original project and start again.

The global strategists at Société Générale, who must be doing something right. The team rose from 24th to second place in the Extel Survey this year, knocking Smith Barney Citigroup into third place. Dresdner Kleinwort Wasserstein took the top spot again.